Cash Budget

Cash Budget is an estimate of cash inputs and outflows of a particular business or even an individual over a set time period. By taking a look at the cash budgets, one can make out whether a company has the necessary amount of cash for fulfilling its day to day operations. It is also used for determining whether a company is spending too much of its cash on unproductive works. The main purpose of making a cash budget is to develop a summary of the purchase and sales of assets, anticipated revenues, operating expenditures and also whether there will be any future need of more cash resources and or even an excess of cash inflow. A cash budget is of immense importance, particularly for smaller businesses. It finds its usefulness in avoiding cash shortage whenever there are periods of excessive expenditure. Without creating a cash budget, if you spend a dollar a day on your favorite cup of coffee may leave you with unnecessary expenses.